A report by The Australia Institute claiming that the Australian resources sector was ripping money from state and territory government coffers has been exposed as “nothing more than sham”, according to the Queensland Resources Council (QRC).
In a statement released this morning, the QRC claims, “An independent analysis by a former head of the New South Wales Treasury, Michael Schur, has revealed fundamental errors in a report that was designed to deceive the public into thinking state governments were funding the Australia’s resources sector instead of vital public services.”
The Australia Institute’s report, released in June, claims that State and Territory governments across Australia were subsidising the Australian resources sector to the tune of $17.6 billion over a six year period between 2008/09 and 2013/14 .
QRC Chief Executive Michael Roche said it was no surprise the report by The Australia Institute (TAI), called Mining the Age of Entitlement, was deeply flawed.
“The litany of errors that peppers the report are obvious,” Mr Roche said.
“The bulk of the expenditure claimed as a subsidy, $10.3 billion, is associated with the commercial provision of rail, port, water and electricity services and infrastructure from which the government generates significant income.”
“In addition, $3.7 billion in capital expenditure claimed as a ‘subsidy’ was spent by the government on items such as roads.”
“The TAI incorrectly asserts that capital expenditure on road projects associated with the resources sector constitutes a subsidy. Roads are funded largely through general taxation and are available to all vehicles whether private or business.”
“The remaining investments—comprising about 20 percent or $3.6 billion—aren’t associated with the mining and resources sector at all and appear to have been incorrectly categorised.”
“There are a lot of very effective campaigns from anti-mining activists who want to shut down the fossil fuel industry in Australia, but this effort by the TAI takes the cake.”
Mr Schur, Managing director of Castalia Strategic Advisors, who undertook the report, said TAI’s claims in its report were based on a flawed analytical framework and were, in the main, unfounded.
“Behaving commercially is mandatory for government-owned businesses – or public trading enterprises – it is embedded in the legal, policy and institutional frameworks by which they are governed,” Mr Schur said.
“All their expenditure is by definition therefore commercial, and cannot be a subsidy to the mining and resources sector.”
“Inexplicably, The Australia Institute claims that about $1 billion in Queensland passenger rail concessions are somehow a subsidy to the mining and resources sector and no logical reason is provided as to why this may be so,” he said.
Mr Roche said TAI report was remarkable for turning out an “instant collection of howlers” asserting so-called subsidies such as:
- A barge landing at Aurukun (there is no mine at Aurukun)
- The capital cost of expanding the Meandu coal mine (supplying Tarong Power Station) is being recovered through electricity charges. The government owns the mine and the power station.
- Rail infrastructure concessions totalling more than $1 billion over 2012-13 and 2013-14 were not for the benefit of resources companies (who pay full commercial rates for track use and freight services) but essentially a budget subsidy for passenger transport and unprofitable regional freight services.
‘Last financial year, resources sector companies spent almost $38 billion in Queensland on wages, goods and services and communities.
‘That direct spending injection is calculated to have generated total spending of $76 billion – one quarter of the state’s economy.’
A copy of the Castalia report can be found on the QRC website.